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Entrepreneurs and Investors

When a person starts to accumulate money, that is to say capital, they are faced with a choice of how to employ it productively. They could of course save it in a savings account or in a GIC, or they could hide it in a vault or in their mattress, but those aren’t productive choices.

For capital to be productive, it needs to be invested. That means it should be put to work to somehow increase in value, either by producing something or by building production capacity. As an aside, this is something that governments seem not to understand at all. An investor is someone who chooses worthwhile ventures to support with their money, with the expectation that they will be able to recoup their investment with growth or sell their stake later.

Entrepreneurship is similar in its purpose to increase value. The main difference I see is that the entrepreneur invests not only their capital, but also their time and effort in making their investment grow. They provide vision to realize an idea and they provide management by building a team and processes to make the realization efficient. All this should produce profit for the entrepreneur and value for society.

The roles of both investor and entrepreneur are positive within society. However, I have more admiration for entrepreneurs for two reasons. First, they must have (or develop) skills in both leadership and management. Second, they use their skills to influence the outcome of their investment. The final result is somewhat more (not fully) inside their control. Investors, while providing necessary capital, must rely on others to ensure the project is profitable.

Having said that I greatly admire entrepreneurs, I’ve never had any first-hand experience with entrepreneurship. Still, I am doing what I can to learn and develop skills in leadership and management, which I expect to be useful in a number of contexts.

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